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investment in iron ore, steel will boost economy

Appraising Nigeria’s quest for economic prosperity

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By Gregory Mmaduakolam

Experts are of the view that the structure of Nigeria’s economy has changed significantly from what it used to be before independence.

They say that it has transformed from being mainly agro-based to oil export and some level of manufacturing and services.

Before independence, the nation’s economy before was built around agriculture leading to foreign exchange earnings from such farm produce as palm oil and nuts, cocoa, rubber, cashew nuts, groundnuts, timber, hides and skin, among others.

Virtually every part of the country had something to export.

Unfortunately, this pattern of foreign exchange earning was abandoned after independence following the discovery of crude oil in commercial quantities in Nigeria.

The consequence is the mono economy being practiced in the country as past administrations paid lip service to diversification of the nation’s foreign change channels.

Mr Thaddaeus Nnah-umeru, an economist, said revenues from farm produce also enabled the regions to build amenities such as schools, hospitals and textile industries, tertiary institutions like Ahmadu Bello University, among others.

He also said in the immediate post- colonial era, Western region, built University of Ife now Obafemi Awolowo University and Cocoa House while the Eastern region built Nkalagu cement industry among others from its cash crops.

In the face of no viable industrial sector in immediate post –independence Nigeria, agriculture continued as the mainstay of the economy, about 65 per cent to GDP and employing no fewer than 70 per cent of its population.

Some experts say the oil boon of 1970 gave rise to a mostly lazy populace as agriculture gradually took the back seat in the economic drive and oil emerged as the leader.

Mr Victor Odor, an economic historian said that with so much money to spend, the Federal Government astronomically increased workers` salaries in what has become the `Udoji award`.

‘‘In 1972, during Nigeria’s oil boom, the Yakubu Gowon, administration, asked Jerome Udoji, a prominent Nigerian known for his roles in business administration, government service, philanthropy, and a traditional leader, to lead a commission reviewing civil service standards and compensation in the country’’.

“The commission made recommendations, known as the “Udoji Award,” which included salary increases, civil servant training, administrative structure reforms, and the  introduction of goal-oriented management’’, Odor said.

“With the award, there was much money in the economy chasing very few goods and services (inflation) remarkably because the government refused to invest these monies wisely’’, Odor said.

He said poor foresight by oil boom-era leaders for the neglect of non-oil sectors, failure to expand public sector infrastructure and deterioration in financial discipline and accountability.

He said the period characterised by corruption led to many foreign companies exiting Nigeria, adding that it has continued till date.

The implication of this, according to him, is economic stagnation, if not retrogression, and lack of diversified economy, making Nigeria vulnerable to the unpredictable of the international oil market.

Prof. Enang Udah, Department of Economics, University of Calabar, said that foreign companies and investors are leaving Nigeria due to harsh economic challenges.

He said that this would have significant economic consequences, including loss of job opportunities and potential negative impact on local businesses and economy.

Udah also predicted that this would lead to decrease in overall economic growth and hinder the nation’s development in key areas as well as low foreign exchange earnings.

He also said it could result in reduced government revenue and increased unemployment rates, contributing to economic challenges for the country.

‘‘Most companies cannot repatriate their dollar earnings because of the volatility in the foreign exchange rate market coupled with insecurity and poor infrastructure in the distribution chain, as well as multiple taxation.

‘‘Driving from the South East to South-South you will see a litany of checkpoints mounted by various levels of governments demanding various forms of taxes from trucks.

‘‘Kidnapping has become big business and security operatives appear to be helpless. Which foreign company doing legitimate business will remain? Those in mining will never leave until the mineral they are exploring gets exhausted.

‘‘Nigeria made progress before and immediately after independence because we had less corrupt and selfish leaders; we had a structured development plan that was followed“, said.

He also blamed the economic challenges on acceptance of economic policies prescribed by Bretton Woods Institutions.

“Corruption, nepotism, inept leaders ethnic and religious sentiments have dampened our progress,’’ Udah, said.

Prof. Adedoyin Lawal, Head, Department of Economics Bowen University, Osun, said foreign companies leaving the country would have multiplier economic consequences for the nation.

Lawal said foreign companies and investors leaving the country would lead to job losses, which, according to him, compound the already bad employment situation in Nigeria.

To curb these economic challenges, Lawal said  the Federal Government should fix the power sector and remove multiple taxation  for both local and foreign investors.

He further advocated tax holidays for new investors as well as advised Nigerians to patronise made in Nigeria goods and services.

He said it was unfortunate that members of the National Assembly that should lead in the patronage of made in Nigeria products imported their official vehicles when there is a local auto maker.

During the inauguration of his administration on May 29, President BolaTinubu acknowledged the enormity of the challenge of turning the economy around for the better but assured Nigerians that he is equal to the task.

Tinubu vowed to drive economy expansion at the rate of at least 6 per cent annually as well as to lift barriers to investment, create jobs and unify the exchange rate, and tame insecurity.

“On the economy, we target a higher GDP growth and to significantly reduce unemployment,” he said.

He said the ambition would be met through budgetary reform, boosting power generation and improving food security.

“I have a message for our investors, local and foreign: our government shall review all their complaints about multiple taxation and various anti-investment inhibitions,” Tinubu told his audience.

But as some Nigerians feel uncomfortable with the pace of the promised economic transformation, there have been calls for caution and patience with the president.

“I can assure Nigerians that the president is working hard to fix the economy, and serious work is ongoing to reposition the economy so that citizens can enjoy the dividends of democracy.

“The reformation process is not easy, and that explains why we are experiencing what we are experiencing presently.

“I appeal to Nigerians to be patient as things will be alright soon,“ Mr Abiodun Faleke, a member of the  House of Representatives from Ekiti State, recently told his constituents at a town hall meeting in Lagos.

With continued rise in inflation and high cost of living, Nigerians want Tinubu to expedite action on his economic rescue agenda. Many Nigerians think he has the potential to do.

They point at his sterling economic performance as Lagos governor as example of what can do.

insurance

Insurance industry’s 10-year strategic transformation roadmap

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Lagos, Jan. 1, 2024: The insurance industry in the year 2023 recorded unprecedented success with the launch of its 10-year strategic transformation roadmap to re-sharpen the sector’s landscape, positively.

Stakeholders, however, view this development as a strategy for upgrading the industry as a market leader in the foreseeable future.

Mr Sunday Thomas, Commissioner for Insurance, who spoke at the launch of the roadmap, said that the 10-year roadmap, which would run from year 2024 to 2033, is expected to revolutionise the industry with a well-coordinated implementation approach.

Thomas said that by 2033, insurance penetration, expected to move from the current rate of 0.4 per cent to 2.1 per cent, would substantially improve the rating of the Nigerian insurance market on the global map.

He noted that the industry would seek to continue its transformation journey along seven strategic thrusts with the objective of achieving the corresponding goals.

The thrust of the strategic plan, according to him, include transformation of the regulatory environment to sustain industry growth and transition to risk-based capital model.

It also involves promotion of insurance awareness and adoption, broadening of insurance product offerings, and improvement of the effectiveness of its distribution channels.

The strategy would also enhance industry digitalisation, deepening talent pool and capabilities, as well as support of the country’s economic transformation and sustainability agenda.

The commissioner said the performance and potential of the insurance sector over the years experienced an average steady year-on-year growth of 15.1 per cent in premium income.

This development, he observed, is far below the opportunities provided by the Nigeria economy, as records indicate that the cumulative assets of the Contributory Pension Scheme (CPS) stands in excess of N17 trillion.

He stated that the sector was expected to maximise its share of the growing fund; hence, the need for stakeholders to support the government towards reviving the economy and de-risking individual and business ventures.

Thomas said: “In pursuit of the drive by President Bola Tinubu towards a thriving economy, the insurance sector must be strengthened to play its role in realising this laudable national objective.

“NAICOM (National Insurance Commission) is very mindful of our collective responsibility to ensure that insurance institutions prosper; for it is in that prosperity that lies our attainment of our regulatory objectives of safeguarding insurance.

Mrs Ebelechukwu Nwachukwu, Chairman, Sub-Committee on Publicity of the Insurers’ Committee in an interview with the News Agency of Nigeria(NAN) described the 10-year roadmap as a dynamic plan for the industry within the next decade.

Nwachukwu, who is the Managing Director, Royal Exchange General Insurance, maintained that the insurance industry regulatory environment had improved significantly.

She noted that continuous improvement, Risk-Based Supervision(RBS) and Risk-based pricing as well as capital is an indicator to the growth of the industry.

In achieving the strategic thrust, the managing director stated that NAICOM had commenced mobilisation of the RBS in some insurance companies to set standards for the operators.

Nwachukwu observed that the regulator had, consequently observed descripancies, including unlicensed agents and brokers by some insurance companies.

She emphasised that NAICOM would, henceforth, not condone employment of quack agents and brokers by operators.

In broadening insurance product offerings and effectiveness of distribution channels, Nwachukwu said that the regulator had encouraged insurers on underwriting annuity policy.

To ensure that annuity, as a product line, grows significantly, she revealed that insurance operators had agreed on the need to increase awareness and continue to build trust.

“With the amount of money in the pension industry, we should expect that a lot of that should be downloaded into the insurance industry by way of annuity.

Commenting, Mr Edwin Igbiti, President, Chartered Insurance Institute of Nigeria (CIIN), said that sustainability has become a critical agenda in all sectors and the insurance industry, not an exception.

To him, the responsibility of the regulator and operators to ensure that insurance remains a viable and sustainable industry for the benefit of all stakeholders must be paramount.

He noted that while the industry is faced with the challenges of balancing economic growth with environmental and social responsibility, technology has offered opportunities to create positive change in the coming years.

The CIIN president said to drive insurance sustainability, operators must start a rethink of assessing and managing risks.

While emphasising the role of technology in this jet age, Igbiti said that operators now, more than ever before, accurately assess risks and tailor insurance products accordingly.

“By leveraging real-time data, insurers can identify vulnerabilities, anticipate potential losses, and proactively manage risks.

“This not only benefits the insurers themselves but also promotes sustainability by encouraging preventive measures and reducing the overall environmental and social impact.

“Furthermore, technology offers insurers the opportunity to explore innovative insurance products and services that address emerging sustainability challenges.

“Climate change, for instance, presents unique risks that require adaptation and mitigation strategies.

“By leveraging technology, insurers can develop innovative coverage options that protect against climate-related events more comprehensively.

“This includes parametric insurance products that trigger payouts based on predefined weather patterns or satellite data, enabling faster claims settlements and minimising administrative costs,” he said.

According to him, insurers can foster a culture of sustainability and contribute to a greener future by encouraging policyholders to adopt sustainable lifestyles and offering rewards for responsible choices.

Naira

Can government tame Naira’s volatility?

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The depreciation of the Naira against major international currencies has been a major concern for both Nigerians and the government in 2023.

This volatility in the Naira has had a significant impact on the overall economy and has put pressure on foreign reserves.

Having an unstable currency like the Naira hampers economic planning, discourages investment, and fuels inflation, ultimately affecting ordinary Nigerians.

Therefore, the pursuit of a stable Naira remains a top priority for the government.

To address the issue of Naira instability, the government has implemented various strategies through the Central Bank of Nigeria(CBN).

It came up with fixed exchange rates and adopted a managed floating regime to strike a balance between stability and flexibility, aiming to free the Naira.

However, achieving a stable exchange rate is crucial, as it fosters confidence, encourages trade, and attracts foreign investment, paving the way for sustainable economic growth.

It is important for all stakeholders to work together and address the underlying factors contributing to the Naira’s volatility to build a more resilient economy.

President Bola Tinubu, while presenting the 2024 budget to the National Assembly,  set the exchange rate between the Naira and the U.S. dollar at N750 to a dollar.

Analysts said that to control the Naira unpredictable instability, concerted efforts were required from all stakeholders to address the underlying factors contributing to its volatility and to build a more resilient economy.

Reacting, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said that for any government to truly control Naira unpredictable, a comprehensive step must be taken to address the issue.

Yusuf acknowledged that the CBN was currently implementing a new market-based approach in managing the foreign exchange market, which is perceived as more efficient and transparent.

He said that this had led to a weaker Naira currency but noted that the situation could improve over time.

According to Yusuf, the success of this new approach will rely on its ability to attract foreign investment, promote economic growth, and effectively manage inflation.

He, however, said that the government decision to officially adopt a new exchange rate of N750 per dollar for 2024 could have positive and negative consequences for the economy.

According to him, the current exchange rate is more realistic and reflects the true value of the currency, as well as government efforts to eliminate foreign exchange subsidies.

The economist said that the development had resulted in increased government revenue, as the conversion of dollar earnings at N750 is more favourable compared to the previous rates.

He explained that the major advantage of the new exchange rate is its positive impact on government revenue.

“Unlike what was used before, the current exchange rate, as it is used, is more realistic and reflects the market situation-the true value of the currency of the exchange rate.

“More importantly, the attempt to eliminate the foreign exchange subsidy that has existed before has helped to increase government revenue.

“So, these are some of the major advantages that this new exchange rate will bring to the economy and the government; there will be major revenue advantages.

“Can you imagine when we were converting our dollar earnings at N450?  You can imagine what it was under the previous government compared to the dollar earnings at N750 to a dollar.

“You can see that the revenue implication is huge. So, there’s a major revenue advantage,’’ he said.

He noted that challenges encountered during previous attempts to manage the exchange rate included corruption and a large difference between the official rate and the parallel market rate.

According to him, such discrepancies create incentives for round-tripping and hinder economic stability.

“The premium between the official rate and the parallel market rate was very high; getting close to almost 100 per cent. You can’t run an economy that way such that you now create incentives for people to now be round tripping.

“So, there’s a major problem of corruption and round-tripping that the previous foreign exchange regime created.

`Secondly, it lacked transparency because we didn’t know who was getting what and what the criteria for the allocation was. This eroded public trust and confidence in the financial system, among others.’’

Ndubisi Nwokoma, Professor of Financial Economics and Director of the Centre for Economic Policy Analysis and Research (CEPAR), University of Lagos, stated that adopting a particular exchange rate for the country at any time, fiscal policy was easy to do.

“But the question is, can the government fund the foreign exchange market to sustain the rate? That is the million dollar question.

“The sustainability of N750 to a dollar exchange rate will depend on the efficient management of both the supply and demand forces in the market.

“Currently the Investor and Exporters rate is in the region of N880 to the dollar and bringing it down to N750 will require some great effort by government to beef up supply through remittances, export proceeds and other foreign capital inflows,’’ he said.

Nwokoma said at present, foreign capital inflows to Nigeria are largely not good enough, noting that there is also the demand management dimension which according to him, work needs to be done in these areas.

inflation rate record

Specific blueprint critical to assess impact of inflation on economy

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Abuja, Jan. 1, 2024 : Some Stakeholders in the manufacturing sector say Nigeria needs a specific blueprint to critically address the impact of inflationary pressures on all economic activities in the country.

According to the World Economic Forum’s Global Risks Report 2023, the world’s top current risks are energy, food, inflation, and the overall cost of living crisis.

In 2023, Nigeria’s inflation rate in January started at 21.82 per cent and by November, had soared to 28.20 per cent with its attendant impact on manufacturing, cost of living vis-a-vis healthcare, feeding and other major dynamics.

Already, the federal government, through its “Renewed Hope Agenda”, recently rolled out various intervention programmes to cushion the effect on both the economy and individual livelihood.

The intervention programmes include N35,000 wage award, N25,000 cash transfers to 15 million vulnerable households, and N200 billion provision of stable food and agricultural inputs.

Others are N50,000 grant to Nano businesses, while Micro, Small and Medium Enterprises (MSMEs) and manufacturers are to access loans up to N1 million and N1 billion, respectively.

However, economic experts have emphasised that for any meaningful change and stemming of hyper-inflation in 2024 and beyond, major monetary and fiscal policy shake-up as well as inflation blueprint tailored to fit the country’s need are holistically necessary.

An Associate Professor of Entrepreneurship at the Kwara State University (KWASU), Dr Zekeri Abu, told the News Agency of Nigeria(NAN) that Nigeria must consciously begin to invest in its area of comparative advantage and strength to grow the economy.

This, Abu explained, would give the country its much needed edge as a player under the Africa Continental Free Trade Area (AfCFTA) to ensure export-oriented balance of trade.

He noted that for Nigeria, common causes of inflation through the year have been traced to removal of oil subsidy, increase in price of food items, ports congestion, high cost of manufacturing production and import inflation, among others.

The associate professor recalled that serious exporting countries like Japan, United Kingdom, China, Germany, United States of America and India, Canada invest massively in manufacturing, value-chain and ecosystem, in products of everyday use such as textile, automobile, food, technology, pharmaceuticals and oil.

“With this in mind, it has become very important for Nigeria to begin to balance her trade by shoring up its exports to become a trade giant, accumulate more foreign exchange to boost the country’s reserves and excert confidence in its economy.

“The will-power of the Federal Government must now be focused on areas where the country has comparative advantage such as agriculture to begin export of finished products like rice, cocoa and livestock.

“Government must further invest in the required level of skill acquisition, knowledge, research and technological innovation to enhance the country’s manufacturing sector, address import inflation and create massive employment opportunities.

“It is also very important to revitalise the tin industry as an ancillary industry to the canning industry to wake up the manufacturing eco-system to exhibit that Nigeria has love for processed canned food.

“Nigeria must begin to carry out research into how we can get value from rubber seeing that the country is a big source of gas and synthetic crude that can be used in rubber.

“In essence, the country’s economy boasts of economic diversity which can be harnessed by the manufacturing sector via increased production for exports to give it its pride of place in the comity of nations, he said.

Mr Segun Ajayi-Kadir, Director-General, Manufacturers Association of Nigeria (MAN), advocated major infrastructural facilities to facilitate the aggregation of raw materials for export to develop the domestic economy and its people.

Ajayi-Kadir said that several initiatives aimed at developing the economy have various degrees of successes and failures, noting that performance of the manufacturing sector has been largely unimpressive as the country remained a largely import dependent country.

According to him, local manufacturing, though experiencing some measure of progress in light manufacturing, still largely depends on foreign inputs.

He listed a number of factors inhibiting the growth and development of the economy, among which are power and transport and

ports, due to unfavourable policies.

He noted that the manufacturing sector contributes less than 10 per cent to the country’s Gross Domestic Product (GDP) due to inflation, which has risen to about 30 per cent.

This, he said, was even as interest rate at double digits continue to limit the potential of the sector for expansion due to high-rate of foreign exchange and the non-prioritisation of allocation to the sector that truncates its growth prospect.

“There is, therefore, the need to address the binding constraints that have continued to militate against the performance of the manufacturing sector and limited its share of contribution to the GDP.

“Nigeria must encourage investment in local raw materials through direct incentives, improve power supply by removing the impediments to access of the eligible customers scheme by manufacturers.

“It is also important to review the curricular of tertiary institutions to align with industry skill requirements and subject to updates based on the direction of global changes.

“We must rehabilitate existing major economic road corridors and construct new ones for seamless movement of raw materials to factories and finished goods to the markets and invest significantly in ports infrastructure to aid smooth clearing process.

“There should also be the elimination of the gridlock into the ports, whilst the moribund rail tracks leading from the ports to industrial areas are reactivated,” he said.

Dr Chinyere Almona, Director-General, Lagos Chamber of Commerce and Industry (LCCI), described the current inflation as the highest since August 2005 which has continued to reflect in the depreciation of the Naira, high price of petroleum products and food prices.

She noted that inflation of food and non-alcoholic beverages have remained the highest contributor at 14.61 per cent.

Almona stressed that though inflation has been accelerating for eleven consecutive months, the battle must be checked by the Central Bank of Nigeria (CBN).

“We anticipate economic agents, including households and businesses, to continue to deploy strategies that will mitigate inflationary pressures.

“CBN is responsible for formulating and implementing monetary policies that foster currency stability. This involves a delicate balance between managing inflation, ensuring a competitive exchange rate, and promoting economic growth.

“Therefore, the CBN needs to adopt a well-calibrated policy mix that addresses the unique challenges facing the Nigerian economy.

“By promoting economic diversification, implementing effective interest rate policies, managing the exchange rate judiciously, and embracing inflation targeting, the CBN can contribute significantly to ensuring the stability of the Naira and fostering a robust and resilient economy,” she said.

Almona implored the government to address challenges inhibiting domestic production and ease the bottlenecks to the distribution of goods within the country.

She urged the government to continue to address the problems of insecurity and other factors affecting agriculture productivity in the country to improve food supply.

Dr Muda Yusuf, Founder, Centre for the Promotion of Private Enterprise (CPPE), stated that the country’s current fiscal deficit is highly inflationary, lamenting that the global energy situation and rural-to- urban migration among others have affected agricultural productivity.

As a way forward, Yusuf, a private sector activist, urged the government to address exchange rate, energy cost, insecurity, and climate change dynamics such as flooding.

“We must begin to consider what can be done about the environment and also enhance our local refinery to reduce pressure on foreign exchange.

“Government also needs to invest heavily in rail logistics because it is now expensive to move goods on the roads given the state of our roads.

“There’s absolutely no need to move cattle, food, among others, over hundred of kilometres by road when just one rail would move what hundred trucks can carry,” he said.

ecowas_map

Economy: PAPSS and West Africa cross-border digital payment revolution

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In the bustling and diverse landscapes of West Africa, where cultures intertwine and economies thrive, a shared struggle unites its peoples; the ordeal of cross-border digital payments.

According to an ECOWAS, the total trade of the region has averaged 208.1 billion dollars with exports and imports projected at 137.3 billion and 80.4 billion dollars respectively.

For years, individuals and businesses across the region faced formidable challenges in conducting seamless transactions, grappling with exorbitant fees, prolonged processing times, and the overall inefficiency of traditional payment systems.

This predicament hindered economic growth and left many business people in a state of financial uncertainty.

Amidst these struggles, the Pan-African Payment and Settlement System (PAPSS) an initiative spearheaded by the African Union emerged as a tool for ameliorating burden and easing cross border business activities.

Inaugurated on Sept. 28, 2021 by the Afreximbank in conjunction with the African Continental Free Trade Area (AfCFTA), the system is available to be used by businesses on the continent

The PAPSS, experts observe, would alleviate the burdens placed on West Africans by the limitations of existing payment infrastructure.

In Accra, Ghana, Mr. Charles Ifeanyi found himself desperately racing to Kotoka International Airport in the early hours of one Tuesday. An urgent need for a business trip to Lagos left him with no time to book his flight in advance.

With bated breath, he arrived at the airport, hoping for a miracle. Luckily, there were still available seats on Africa World Airlines (AWA). Unfortunately, Ifeanyi only had a Naira MasterCard, while the Ghanaian airline accepted payment in Cedis.

Frantically searching for a solution, Ifeanyi’s heart sank as he watched the flight depart without him. The event he was rushing to in Nigeria slipped through his fingers.

“In the process of trying to find a way out, I missed the flight as well as the event I was going for in Nigeria,” says Ifeanyi while narrating his ordeal to the News Agency of Nigeria (NAN).

Ifeanyi’s story is not unique. Dr Ken Ashigbey found himself facing a similar challenge during his recent stay in Abuja.

Upon checking out of his hotel and returning to Accra, he received an unexpected call from a concerned receptionist. It seemed he had underpaid for his stay, and money needed to be sent to Nigeria urgently.

Realising the obstacle before him, Ashigbey had to reach out to a Nigerian friend for assistance.

Ashigbey’s case reflects the experience shared by many in Africa – the urgent need for an integrated digital payment system that can propel economic growth across the continent.

“To send money to Nigeria became a problem. When I sensed the receptionist was in trouble, I had to call a Nigerian friend, who helped me to pay the money.

“That is the situation in Africa. There’s a need for an integrated digital payment system for Africa if we are to improve on our economic growth,” Dr Ashigbey says.

It is evident that across West Africa. Both businesses and individuals face immense cross-border payment challenges. This is a major roadblock which hinders regional economic growth and collaboration.

Experts and economists point to a myriad of issues plaguing the existing system, ranging from high transaction costs and lengthy processing times to the lack of interoperability among different national payment platforms.

The intricacies of navigating multiple currencies further complicate matters thereby stifling the potential for seamless trade and financial inclusion.

Mr Edward Karanja is a business analyst; he says PAPSS would play a critical role since it integrates local banks across Africa to enable transactional settlements.

“For starters, intra-Africa trade is the biggest goal for the African free trade agreement whose aim is to reduce the tariffs and non-tariffs trade barriers.

The settlement of payments is a key infrastructure to enable this growth,” says Karanja.

The analyst said that the new payment and settlement system aims to simplify and expedite cross-border transactions.

This, he said, would in return increase the volume of trade across Africa, thus growing the African economies.

By providing a centralised and efficient payment and settlement system, PASS, according to him, will reduce transaction costs associated with cross-border payments, especially the dollar conversion rates.

He says de-dollarisation of Africa of some sorts will build a reliance on Africa’s currency as opposed to foreign currencies, hence improving currency stability by lowering the risks associated with foreign currencies fluctuations.

Ade Adefeko, an economist, further shades light into the payment obstacles experienced by African business people.

Adefeko is the chairman, Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) Export Trade Group.

He said before the PAPSS, a buyer in Nigeria who intended to buy goods from a seller in Botswana would be required to pay the seller in a third currency from outside the continent.

The currency either US dollar, the Euros or the British Pounds, he said, is paid with extra charges to have the agreed sum processed and sent to the seller in Botswana.

Notwithstanding this payment, the buyer, according to him, will still have to wait several days for transactions to clear.

“Aside from time constraints, the process of currency conversation adds to the cost of doing business and in reality, the money has to leave Africa before being sent back to Botswana.

“This has been the situation until the introduction of the PAPSS. It has been conceptualised as a tool to address this by significantly reducing the constraints being experienced in African regional trade payments.

“With the operationalisation of PAPSS, the same business would only pay in Nigerian Naira while the seller will receive Botswana Pula. The PAPSS serves as the clearing, processing and settlement agent in the transaction“, he said.

He said this means that only the deficit between the two countries would be settled using the US dollar, Euros or the British Pounds.

“Whether for shopping, transferring money, paying salaries, dealing in stocks and shares or making high-value business transactions, the PAPSS real-time infrastructure provides a reliable, cost-effective answer for instant payments.

“It enables the efficient flow of money securely across African borders, thereby minimising risk and contributing to financial integration across the regions,” says Adefeko.

To facilitate instant payments across African borders in local currency, experts say, PAPSS supports three core processes. One of these is instant digital payment.

Adefeko said that participants would no longer need to convert local currencies into hard currencies as compliance, legal and sanctions checks are performed instantly within the system within 120 seconds.

Pre-funding, he told NAN, is the second process, where PAPSS guaranteed availability of funds to complete the originator’s transaction before effecting the movement of debits and credits between participants’ accounts

He said, net settlement; whereby PAPSS determines net position in local currency for all participating central banks daily, is the third process that the innovative digital payment system also supports.

The project has been piloted successfully and lives in the six countries that make up the West African Monetary Zone (WAMZ), which are Nigeria, the Gambia, Sierra Leone, Liberia, Ghana and Guinea.

To understand the broader implications of PAPSS, financial experts and economists who have closely monitored the region’s economic landscape react.

Edward, an economist with expertise in digital financial inclusion, underscored the significance of PAPSS in fostering economic collaboration.

“PAPSS is a testament to the potential for technology to break down barriers. By providing a common platform for payments, it encourages intra-African trade and bolsters economic integration,” Karanja said.

Similarly, Dr Aisha Ibrahim, a researcher specialising in financial technology, said PAPSS could facilitate financial inclusion.

She said the system was designed to be accessible to everyone, from small businesses to individuals.

The inclusion, she said, is crucial for bridging the financial gap and empowering communities.

Beyond the individual stories of transformation, she adds, PAPSS would instil a sense of unity in the diverse tapestry of West Africa.

According to hi, countries that were once isolated by financial borders will now find common ground in a shared payment infrastructure.

“It is not just about transactions; it’s about building bridges between nations. PAPSS is fostering a sense of unity among West African countries, encouraging collaboration in ways that were previously hindered by financial barriers,” Ibrahim said.

While PAPSS has undoubtedly made strides in addressing cross-border payment challenges, experts acknowledge that there are still hurdles to overcome.

Such hurdles include regulatory issues, cyber security concerns, and adapting to rapidly evolving technologies.

“The success of PAPSS relies on continuous collaboration and adaptability. Regulatory frameworks need to evolve to support this pan-African initiative, and stakeholders must remain vigilant against emerging threats in the digital landscape,” Karanja cautions.

youth-farming

Food inflation: Dry season farming to the rescue?

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By Chijioke Okoronkwo

By most accounts, food inflation is a global challenge which bites harder in poor and developing countries.

In Nigeria, experts say reason for the worrying level of food inflation is not farfetched-the removal of fuel subsidy and floating of the exchange rate come top even as the government makes efforts to address the situation.

Perceptive analysts have tried to establish the nexus between the twin challenge of food inflation and food insecurity and their mutual inclusivity

According to them, same variables—high cost of fuel, conflicts, drought, climate change, insecurity, inter alia—must be tackled headlong while dry season farming needs to be ramped up.

Data from the National Bureau of Statistics (NBS) shows that food inflation rate in October 2023 was 31.52 per cent on a year-on-year basis, 7.80 per cents points when higher compared to October, 2022 records which stood at 23.72 per cent.

To this end, governments at all levels are exploring the potentialities in dry season farming with a view to reaping bountifully therefrom.

Sen. Abubakar Kyari, the Minister of Agriculture and Food Security, said the Federal Government was targeting to increase wheat production by over 70, 000 hectares across the nation’s wheat production zones through via dry season farming.

According to Kyari, a yield of 875,000 metric tonnes is expected for the nation’s food reserve.

Kyari listed the ministry’s focal areas which hinges on integration, sustainability, and resilience to its challenges.

He said that these spanned the immediate, short, medium and long term.

“The most pressing actions we are currently handling is preparation for the next dry-season farming beginning from November.

“To this end, some preparatory activities have been carried out and many others are at the advanced stage’’, he said at a while marshaling out the way forward for the nation’s agriculture sector at a news conference.

He further said this included certification of available planting materials for some food security crops in readiness for dry-season farming; aggressive promotion and preparations for dry season farming.

“Also, the implementation of the dry season wheat production starting in November as part of the National Agricultural Growth Scheme and Agro Pocket (NAGS-AP), projects funded by the African Development Bank.

“Under this scheme, the target is to produce wheat over a 70, 000 hectares across the wheat production zone of the country.

“This is with an expected yield of 875,000 metric tonnes for our food reserve; blending of appropriate fertilizers to support this year’s dry season farming.

“While making provisions for next year farming season well in advance; providing Train-the-Trainer for extension agents involved in dry season farming. This will be in collaboration with wheat producing states and other partners such as flour mills’’, he said.

The minister further said that arrangements were also at advanced stage for dry season farming of rice, maize and other horticultural crops.

“The most pressing actions we are currently handling is preparation for the next dry-season farming beginning from November 2023,” he said.

He said that the ministry would hold the National Agriculture and Food Security Summit in November, to bring all stakeholders together for development of National Action Plan for Food Security.

Prof. Joseph Utse, the Minister of Water Resources and Sanitation, said the Federal Government would  cultivate 500,000 hectares of irrigable land for dry season farming as part of efforts to boost food security in the country.

Utse called for the cooperation of state governments and communities to make land available to the 12 basin authorities across the federation, to boost food production.

At the sub-national levels, conscious efforts are also underway.

Some state governments have taken up the challenge of boosting food sufficiency through dry season farming.

Consequently, Alhaji Musa Bosso, the Commissioner for Agriculture and Rural Development in Niger, said that the state government would mobilise 250,000 farmers to engage in mechanised agriculture during the upcoming dry season.

He said it would be done under the government policy of allocating 10,000 hectares of land to farmers in each of the 25 local government areas of the state for wet and dry season farming.

“This is another way of increasing food production; creating jobs and wealth among our people; which will also ensure food security for the state and the nation,’’ he said.

According to him, the ministry is ready for the upcoming dry season farming, adding that the ministry has been selling improved seeds, pesticides, herbicides and fertiliser to farmers.

Bosso also said the government planned to utilise water from Kainji, Shiroro, Jebba and Zungeru hydro dams for dry season farming.

Dry season farming comes with lots of challenges and same state government says they are working out logistics to address them.

In Borno, Gov. Babagana Zulum has deployed 313 tractors to assist farmers in rural areas across the state alongside 100 trucks of fertiliser, sold at a subsidized rate of 25 per cent discount.

Zulum also announced the procurement of 471 ploughs and harrows to be used by the tractors for all-season farming.

The governor said the 313 tractors deployed under the system – one each to the 313 wards in the state – would be rendering free services to farmers who, however, would contribute in fueling them.

In Yobe, the future even looks more promising.

The state’s Commissioner for Agriculture, Alhaji Ali Mustapha, said the government had provided 3,000 metric tonnes of fertilisers and agro chemicals for irrigation farming.

“We distributed up to 3,000 metric tonnes in Bursari, Bade, Jakusko, Fika, Gulani and Geidam Local Government Areas.

“This is the initiative of Gov. Mai Mala Buni to provide necessary materials for irrigation farming to areas designed for the scheme,” he said.

In Adamawa, the Commissioner for Agriculture, Prof. David Jatau, said the government was committed to irrigation farming, considering the delay in rainfall recorded this rainy season and the latest flood caused by released of excess water from Lagdo Dam which affected farmlands.

“The only option left to us now is to take advantage of the opportunity given by government to support dry-season farmers with inputs, including seeds, fertilizers and agro chemicals at subsidised rates,” he said.

Jatau urged the people to key into dry- season farming, particularly rice, wheat and maize productions.

Deserving no less attention, Mrs Adegbemisola Fayoyin, the Permanent Secretary of Osun Ministry of Agriculture and Food Security, said the state would soon commence distribution of seedlings, fertilisers and other inputs ahead of dry season farming.

Fayoyin said the state government had started making preparations for dry season farming and would roll out plans immediately after the rainy season.

“We are waiting for a nod from the state government in the areas of funds and other logistics for the dry season farming.

“We are also waiting for the rainy season to end so that we can commence full preparation for the dry season farming.

“The ministry is also awaiting some support from the state government in the area of funds so we can hit the ground running.

“Our targets are mostly poor women farmers; we want them to get seedlings and other farm inputs for dry season farming,’’ she said.

More so, in Ekiti, Gov. Biodun Oyebanji recently disclosed his government’s plans to improve agricultural productivity through provision of improved seed and seedlings, fertiliser and enhanced extension services to guarantee food security in the state.

Oyebanji said the plans also included expansion of rural and feeder roads to boost the distribution of agricultural produce to both existing and new markets, and to deepen agricultural value-chain.

Mr Abayomi Monilari, President, Ondo State Farmers Congress, said that it had become imperative for all farmers in the state to prepare themselves for the dry season rather than relying on the government.

Stakeholders are of the view that ramping up dry season farming will bridge the gap between food supply and demand; and in multiplier effect, force down the prices of food.

Tinubu

Nigeria-Saudi Agreement to strengthen Nigeria’s economy

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Abuja, Nov. 24, 2023: President Bola Tinubu’s preference for market driven economy has been consistent, and since assumption of office has steered the Nigerian economy towards greater strides with focus on attracting foreign direct investment into the economy.

Under Tinubu, Nigeria has been undertaking its boldest reforms in decades, scrapping the popular petrol subsidy and unifying the country’s multiple exchange rates as part of measures to improve ease of doing business in the country.

The recent Saudi-Africa Summit was an apt platform to push for collaboration and cooperation in various sectors beneficial to the Nigerian economy.

The opportunity was fully exploited by Nigeria to deepen economic relationship with Saudi Arabia which has the largest economy in the Middle East and is the 18th-largest economy in the world.

Saudi Arabia like Nigeria is a member of OPEC, and both have valuable natural resource reserves in petroleum and natural gas. They have also long years of relationship in various fields.

Thus, the signing of a Memorandum of Understanding (MoU) for collaboration in the oil and gas sector, was a major step in strengthening the relationship between the two countries.

“One of the primary benefits anticipated from this landmark agreement is the facilitation of technological exchange.

“With Saudi Arabia boasting advanced technologies in oil and gas exploration and production, Nigeria stands to gain significantly from this knowledge transfer.

“It encompasses joint research and development initiatives, knowledge-sharing platforms and capacity-building programmes.

“This holistic approach aims to empower local talents within Nigeria’s energy sector, fostering a self-sustaining environment where indigenous expertise plays pivotal role in shaping the nation’s energy future.

“This, in turn, is expected to stabilise fuel prices and enhance energy security, providing tangible benefits to Nigerian households and businesses alike,’’ a statement from the Ministry of Petroleum Resources (Oil) disclosed.

President Tinubu used the forum to underscore Nigeria’s commitment to free economy and protection of investments as the country strives to attract more Foreign Direct Investments.

”Nigeria is committed to ensuring the safety of investments based on the sanctity of the rule of law and good returns on investments in the largest economy in Africa”, Tinubu told the Saudi business community.

He said it was important for the two countries to have a business council to drive investment in key economic sectors agreed in the deal.

“In this regard, the benefit attached to the early inauguration of the Nigeria-Saudi Business Council cannot be over-emphasized,” he said.

“Within the past six decades, our bilateral cooperation, which was initially hajj-centric, has witnessed diversification to cover a number of areas of common interest.”

Tinubu said that both Nigeria and Saudi Arabia have been interacting as members of the UN, OPEC, the International Energy Forum, G77, Islamic Development Bank, and Digital Cooperation Organisation among others.

“My administration has undertaken bold economic reforms by removing wasteful subsidies on petroleum and the merging of our foreign exchange market, among other incentives aimed at improving the ease of doing business in Nigeria.”

In response to the assurances, the Saudi investors pledged to provide funding to revamp Nigeria’s refineries and substantially support the Central Bank of Nigeria in its ongoing reforms of the foreign exchange regime.

Mr Muhammad Idris, Minister of Information and National Orientation, said the Saudi Government would make available a substantial deposit of foreign exchange to boost Nigeria’s forex liquidity.

Similarly, Saudi Crown Prince, Salman, further said Saudi Arabia would invest in Agriculture and Renewable Energy to help Nigeria attain food and energy security.

The Crown Prince said that the investment in Nigeria`s refinery would be led by Saudi Aramco, and the intervention would be completed within two to three years.

The two leaders vowed to work together over the next six months to develop a comprehensive roadmap and blueprint to deliver on the deal.

At the summit, Tinubu said that all impediments to doing business in Nigeria would be removed.

“When I took office, I declared the immediate commencement of bold and fundamental economic reforms. We have executed them, and we’ll sustain the reform process.

“I believe in the full application of free market economics. Your money will flow easily in and easily out.

“The arbitrage around our nation’s old foreign exchange policy regime and the corruption that was associated with it is also gone.

“We took on those bold endeavours from day one in preparation for serious investors like you seated here. The greatest opportunity for any entity to prosper lies in its human capital,” the President told the Saudi business community.

Saudi Arabia’s Trade and Investment Minister, Khalid El-Falih, assured that the business community would respond with new investments across several sectors of the Nigerian economy.

“We know you are ready for business, so we do not want to come to Nigeria for any exploratory discussion. We are coming for implementation. It is an action visit,” Falih said.

“We will prepare well with your team and our investors will align with your officials, beginning now, to develop a concrete work plan of investments in the key sectors for take-off when we meet again.

“We will also use the opportunity to formally inaugurate the Nigeria-Saudi Business Council,” the minister added.

Also, Saudi Commerce Minister, Majid bin Abdullah Al Qasabi, said they would contribute to the soft infrastructural reforms needed to unlock game-changing foreign direct investment in Nigeria.

“We have signed an agreement with the World Economic Forum on the reform of the services sector in Africa.

“In developed economies, the services sector contributes enormously to GDP, but in the developing world, we tend to focus on goods.

”So, we would like to make Nigeria the pilot country in this agreement with WEF to study Nigeria’s service challenges to make it seamless and make the supply chains across sectors streamlined and raised to international standard to enhance Nigeria’s economic and investment viability over the long-term.”

At the Investor Roundtable, proposals were made for tangible collaboration by Chief Executive Officers from several Saudi conglomerates specialising in construction, finance, energy, healthcare, agriculture, mining, aviation, telecommunication, creative arts, and hospitality.

Tinubu assured them that Nigeria was determined to be their partners.

“Nigeria will reward your faith. Our people are ready, and we will not dissappoint.”

He said, “the prospect of the country is yet to blossom to the level that we require.

“It needs hard work and consistent prayers by each and every one of us. We are committed to use our strength to bring out this potential for the benefit of all Nigerians.”

President Tinubu also advanced negotiations for a multi-billion-dollar infrastructure finance facility from the Islamic Development Bank (IDB) to fund a multi-sectoral portfolios of infrastructure projects.

After the discussions witn the Vice-President (Country Programmes) of the IDB, Dr Mansur Muhtar, the bank said “we are ready to work with you. We are ready to support big investments in Nigeria. We agree that if Nigeria succeeds, Africa succeeds. And the world needs Africa to succeed.”

The IDB further announced the provision of 50 billion Dollars of new investments for the African continent from the Arab Coordination Group (ACG).

“As the largest market and the largest economy in Africa, Nigeria will certainly receive a significant share. We look forward to supporting Nigeria’s economic transformation,” Mukhtar said.

Faith Nwadishi, the executive director of the Center for Transparency Advocacy in Abuja, welcomes the Saudi deal.

“Considering the success that Saudi Arabia has made with their refineries and the natural resources that they have, one thing this will be able to achieve is to help Nigeria meet its production quota, help Nigeria resolve some of the conflicts around this issue of subsidy and non-operationalisation of the four refineries that we have,” said Nwadishi.

Emmanuel Afimia, founder of Enermics, a Lagos based oil and gas consulting firm, said the administration “is showing a reasonable level of political will to make things happen.”

Tinubu’s Saudi trip has therefore been a huge success and has set the stage for bigger engagements for the benefit of both countries.

When the Nigeria-Saudi Business Council is inaugurated, the expectation is that it will unlock the funding of several sectors of the Nigerian economy, facilitate access to modern technologies, and growth of telecommunications, energy, oil, gas and agriculture sectors.

Experts believe that Nigeria will attract multi-billion-dollar “immediate” investment flows from the Saudi Kingdom.

It is thus, safe to say that Tinubu has so far shown the strength of character and experience in engaging genuine investors across the globe to revive the Nigerian economy.

The deal with the Saudis is indeed a huge step in addressing the country’s economic challenges.

Industries-in-Hubei-China-reopen-

Reforms in manufacturing industries amidst economic challenges

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By Rukayat Moisemhe

Companies, not just in Nigeria, have always been challenged, over the years, by a culmination of problems.

These problems range from high cost of energy generation, multiplicity of taxes, influx of substandard products and the recent twin economic policies of exchange rate unification and fuel subsidy removal.

It is also not news that manufacturing companies in Nigeria have in their operations laid off staff to remain profitable or shut down completely due to a myriad of problems.

According to Mr Femi Egbesola, President, Association of Small Business Owners of Nigeria (ASBON), over seven million small businesses have died within the last two years.

Also, many large corporations, including Nigerian Breweries Plc, Guinness Nigeria, Dangote kCement, Airtel Nigeria, MTN, Lafarge Plc and Cadbury Nigeria Plc, declared losses running into billions for the first half of 2023.

Most recently is the exit of GlaxoSmithKline Nigeria (GSK) from Nigeria after 51 years of delivering wholesome pharmaceutical services to the nation.

Nigeria, an import dependent nation, has expended some efforts to diversify its economic earnings from oil to non-oil components such as agriculture, manufacturing, pharmaceutical, mining, financial services, amongst others.

However, there is the need for an excellent and a business friendly environment for such diversification to thrive; which may have become hampered by recent economic developments.

Dr Muda Yusuf, founder, Centre for the Promotion of Private Enterprises (CPPE), said that the last few years had been very challenging for businesses in the Nigerian terrain.

He noted that in the case of GSK, the company had been scaling down its operations over the years with many of their products and facilities franchised to other companies.

Yusuf said that for many multinational corporations, exchange rate stability remain a very critical component of their operations to facilitate the sourcing of materials for production.

He added that the country’s operating environment had become very competitive, particularly with the involvement of some Asian companies.

The CPPE boss further said that structural problems such as constant power supply for production, bottlenecks at the ports have existed for years, making it very difficult for indigenous manufacturing to flourish.

“On the way forward, we understand that the current administration is a new government and some of the reforms have created some short term challenges for these businesses. However, they are necessary to put the economy on the right path.

“Government has pledged to intervene and may not leave the entire foreign exchange thing to market forces.

“There are hints that government may intervene in the foreign exchange market to stop the free fall in the currency and the results may take some months to manifest.

“However, the palliatives that government has promised should be speedy implemented.

“All the interventions they listed in the areas of agriculture, transportation, manufacturing, small businesses once implemented would be largely reduced,” he said.

Yusuf said that for immediate impact, government should work toward providing tax relief and fiscal policy incentives such as reduction of import duties for critical manufacturing components for companies.

He said government must ensure a deliberate implementation of the Executive Order 003 and mandate that all stationaries, office consumables, furniture, vehicles and pharmaceutical products must be supplied by indigenous manufacturing companies.

“Government must insist that those things are supplied by local manufacturers and continue to provide concessionary credits for small businesses to yield quick results.

“More efforts should be expended to tackle oil theft to see improvement in foreign exchange earnings which would help the country’s external reserves and stabilize the exchange rate.

“The moment that is stabilised, more inflow of foreign exchange would come in through autonomous forces to help stabilise the markets,” he said.

Mr Segun Ajayi-Kadir, Director-General, Manufacturers Association of Nigeria (MAN), said the North-East where 60 per cent of its member companies had closed down is in dire need of a special policy initiative to address the revival of closed and distressed industries.

He said sequel to the unification of the exchange rate, the Central Bank of Nigeria (CBN) should be prevailed upon to give priority to the allocation of foreign exchange to the productive sector.

This, Ajayi-Kadir said, is critical, particularly to manufacturers to import raw materials, spares and machinery that are not locally available.

He also emphasised the need to direct the National Electricity Regulatory Commission (NERC) to admit all qualified applicant companies into the Eligible Customer Scheme to allow them access power as stipulated in the Electric Power Sector Reform Act 2005.

The MAN DG said all all relevant agencies of government must ensure that the electronic call-up system at the ports aimed at addressing congestion works without failure.

“It is important for government to craft and announce a special policy initiative to leverage diaspora expertise and investment to address evident gaps and help to boost the performance of the economy.

“Government must also direct all ministries, departments and agencies of government to unfailingly comply with Executive Order 003 on patronage of made in Nigeria products.

“In this regard, there should be strict application of the margin of preference, effective monitoring and periodic evaluation of compliance and appropriate sanctions meted out to MDAs acting in breach of the executive order,” he said.

Buttressing, President, Lagos Chamber of Commerce and Industry (LCCI), Dr Michael Olawale-Cole, said to reduce the shocks from global disruptions, manufacturers must be assisted with subsidised input and more allocation of foreign exchange for the importation of critical inputs.

Olawale-Cole said there must be a continuous improvement of electricity supply and that all issues on distribution companies profitability must be addressed.

He noted that the outlook for the oil and gas sector in the third quarter appeared positive due to the resolution of some maintenance issues and partial recovery.

This, he said, means that production levels were expected to continue recovery though with a high risk of reversal due to insecurity, theft, vandalism, force majeure events, and lack of payment discipline.

The LCCI President urged government to share in the sacrifices made by Nigerians and Nigerian businesses by reducing the high cost of governance in all its tiers and ensuring fiscal leakages and corruption are strategically dealt with.

According to him, this will demonstrate to Nigerians that the leaders share in the suffering and sacrifice of the people.

“The perks available to public office holders are so enormous that it is difficult for the average Nigerian to understand why they suffer so much and those in leadership are unaffected.

“The issue of oil theft must not be sidelined at this stage as it has critical implications for the rule of law and our economic well-being as a nation.

“Government should also track down and apprehend the culprits of oil theft as this will act as a deterrent and communicate powerfully that crime must be punished,” he said.

oil-rig

Equatorial Guinea, oil and gas investment hub in Central Africa

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Johannesburg, South Africa, July 7, 2023: Equatorial Guinea, a small yet resource-rich country in Central Africa, presents a compelling energy investment destination.

With a proven track record in oil and gas production, showcasing a strong Liquefied Natural Gas (LNG) export industry and with growing interest in renewable energy, Equatorial Guinea offers a wealth of opportunities for forward-thinking investors seeking attractive returns and long-term partnerships.

At the upcoming African Energy Week (AEW), scheduled to take place 16-20 October in Cape Town, the country will showcase its opportunities through a dedicated Invest in Equatorial Guinea country spotlight session.

This will connect potential investors to the opportunities and prospects that lie within this resource rich country.

What makes Equatorial Guinea attractive is its willingness to offer lucrative opportunities through Production Sharing Contracts (PCS), providing a platform for international companies to partner with the government in exploring and developing the country’s untapped oil and gas reserves.

These contracts offer attractive terms and favourable fiscal frameworks, ensuring a mutually beneficial relationship for both investors and the country itself.

In February 2023, Equatorial Guinea signed three PSCs, including a significant agreement with Panoro Energy, granting them a 56% sharing interest operatorship in Block EG-01, solidifying their presence in the country.

Concurrently, Africa Oil Corporation entered the Equatorial Guinean market through two PSCs, securing an 80% stake in Block EG-18 and Block EG-31, respectively.

This demonstrates the country’s openness to signing additional PSCs to drive industry growth and progress.

Additionally, Equatorial Guinea has been actively engaged in bilateral agreements to monetize its oil and gas resources.

In March, Equatorial Guinea signed a bilateral treaty with Cameroon to foster cooperation between the two West African nations in the development and monetization of oil and gas resources across their shared borders.

This significant agreement not only opens new prospects for oilfield development but also enhances regional energy security in the respective countries.

These agreements allow for the exploration, production and export of hydrocarbons to international markets. Through strategic partnerships, investors can capitalize on the country’s existing infrastructure and market access to maximize their investment returns.

Working towards establishing itself as a regional Gas Mega Hub, Equatorial Guinea is developing a series of major infrastructure projects aimed at enhancing the country’s gas monetization capabilities.

The Gas Mega Hub will serve as a central hub for gas processing, liquefaction and distribution, and will require the expertise of highly skilled companies to successfully process LNG. This serves as a unique opportunity for companies and investors to participate in the market and capitalize from this transformative initiative.

Equatorial Guinea is also actively promoting downstream market expansion, including refinery construction and petrochemical marketing, creating opportunities for investors.

The downstream market is projected to grow over 2% annually from 2020 to 2025, driven by increased gas production and expanded refining capacity.

This includes modular oil refineries, ammonia and urea plants, Liquefied Petroleum Gas storage, a methanol-to-gasoline unit and CNG plant expansion.

These initiatives will contribute to the overall expansion of Equatorial Guinea’s downstream sector, and thus, financing such expansion is crucial.

Meanwhile, investing in Equatorial Guinea’s renewable prospects holds immense potential for investors.

The country has the capacity to generate up to 3,000 MW of solar power, which can play a significant role in diversifying the energy mix and meeting the growing electricity demand.

Furthermore, the ongoing construction of the Djibloho hydroelectric project is set to add an additional 200 MW of electricity upon completion.

This hydroelectric initiative, coupled with other planned hydropower projects, will not only bolster Equatorial Guinea’s renewable energy portfolio but also aid in its long-term energy security.

By capitalizing on these renewable opportunities, investors can participate in the country’s sustainable energy transition and reap the benefits of a forward-looking and environmentally conscious investment.

“Equatorial Guinea’s energy sector presents a wealth of investment opportunities, driven by its rich oil and gas reserves, expanding LNG export capabilities, emphasis on downstream development, and growing interest in renewable energy.

As the country strives for sustainable and diversified energy production, it welcomes investors with open arms,” states NJ Ayuk, the Executive Chairman of the African Energy Chamber (AEC).

What’s more, the country has made significant strides in fostering an attractive investment climate.

The government is dedicated to enhancing transparency, promoting foreign direct investment and establishing investor-friendly regulations. Measures have been taken to ensure the protection of investors’ rights, further bolstering the confidence of potential stakeholders.

“Having an Equatorial Guinea country spotlight session at AEW will be extremely beneficial for the country.

By leveraging Equatorial Guinea’s favourable investment climate, promising projects and existing infrastructure, astute investors can capitalize on this vibrant sector and reap substantial rewards,” added Ayuk.

AEW is the AEC’s interactive exhibition and networking event that seeks to unite African energy stakeholders, drive industry growth and development, and promote Africa as the destination for African-focused events. For more information.

LADOL

The mystery persists as LADOL, SAMSUNG feign settlement of dispute

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 The signing of memorandum of understanding resolving the LADOL/Samsung dispute that lingered for more than five years causing significant economic losses to Nigeria was done last year. 

After the resolution of the five-year dispute on the lease, sublease and equity ownership development of the Egina Floating, production, storage and offloading (FPSO) project, the issue bordering on the short-changing of Nigerian government remains.  

The short change emanates from the operational fees of all parties over a long period that was not paid to Federal government through the Free Zones authority.

The National Assembly called for a public hearing on the issue to ascertain if NEPZA had received the government share. The true position is still unknown.  

It will be recalled that the crux of the matter is that TOTAL paid Samsung US$214 million for the upgrade of the facilities and that Samsung was seeking to retain the US$214 million paid by TOTAL and at the same time assert that it was operating as a contractor to TOTAL rather than as an investor in LADOL Free Zone.  

Samsung not only hid these facts from LADOL, it sought to exclude LADOL from the project so as to own the facility upgraded. Consequently, Samsung procured the 1st June 2014 settlement agreement by fraud and misrepresentations, that no money was provided in the Egina FPSO contract for the upgrade of the LADOL fabrication and integration facilities. That it was rather through capital importation and equipment.

As a matter of fact, TOTAL’s contract with Samsung Heavy Industries Nigeria Limited (SHIN) is a lump sum contract for the engineering, procurement, supply, construction and commissioning of floating production, storage and offloading unit (FPSO).  

Samsung has remained consistent in its assertion of ownership of the fabrication and integration facility on the basis that it had singlehandedly funded the construction of the facility, which it claims to be US$300 million.

Samsung therefore committed massive fraud in connection with the 2014 settlement agreement in order to induce LADOL to surrender its 80% equity ownership of SHI MCI FZE and the fabrication and integration facility.  

There are three aspects to the dispute between Samsung and LADOL.

The first is the ownership of SHI MCI FZE, which is a joint venture between LADOL and Samsung formed to perform the Egina FPSO EPC contract between Samsung and TOTAL Upstream Nigeria Limited (TOTAL).  

The second aspect is SHI MCI FZE’s sublease agreement with a LADOL affiliate, Global Resources Management Limited (GRML).

The third is SHI MCI’s operating license as a free zone enterprise within the LADOL free zone.  

The dispute bordered on the land lease, sublease agreement, equity ownership development of the Egina Floating, production, storage and offloading (FPSO) project.  

LADOL had accused Samsung of fraudulent practices and violation of Nigerian Local Content Laws which had resulted slowing economic activities in the zone as well as the locked up of investments worth over N7 billon and loss of about 3000 jobs.  

According to the MD of NEPZA, prof Soji Adesugba, the settlement opened opportunities for $300 million FDI into Nigeria which generated up to 10,000 jobs in few months but did not mention what Nigeria gained in the controversial deal that is supposed to fetch Nigeria foreign exchange.  

But he explained that NEPZA will continue to monitor SHI and LADOL to ensure that they measured up to what the MoU they signed, details of which Nigerians are not privy to.  

Nigerians are eager to know the status of the contract money which is believed has been shrouded in secrecy during the settlement which took NEPZA to South Korea.  

The dispute was purportedly resolved on February 22, 2022 by the signing of a Memorandum of Understanding (MoU) after Nigeria had recorded economic losses.

No mention has been made of how much was paid to the federal government through NEPZA regarding the settlements and payments therein. 

SHI is the operator of a fabrication and integration yard (SHI-MCI yard) in the zone, which was used to integrate the Egina Floating Production Storage Offloading (FPSO) vessel, which has sailed away to the 200,000 barrels per day Egina oilfield.  

The SHI-MCI yard is a joint venture between LADOL and SHI, with SHI having 70 per cent stake and LADOL 30 per cent, obtained by the misrepresentation and fraud of 2014 judgement.   

The yard is the only one of its kind in Africa, designed to make Nigeria a hub of FPSO fabrication in the continent.  

Apart from the revenue loss of Federal government which has to be accounted for, NPA action of revoking the presidential 25 years lease approval to LADOL, replacing it with a direct lease in 2019 meanwhile, leasing part of the land to Samsung calls for questioning.

Another presidential directive was issued in 2020 to re-affirm the 2018 presidential approval of the land to LADOL. This is not good enough for the image of Free Zone operation in Nigeria and should be discouraged.

It may be recalled that similar incidences have happened in Calabar Free Trade Zone and Ogun Guangdong Free Zone. In that of Calabar, part of the land approved for the Zone was revoked for another purpose while Ogun Guangdong matter even went as far as international court for resolution.

Efforts to seek more details from LADOL and NEPZA have failed as the Chief Executives have failed to respond to our inquiries.  

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